What happens if the taxpayer changes their mind about buying a replacement property and wants to cancel the exchange?
A. If the taxpayer sells the relinquished property and does not find a replacement property, the sale will create a taxable event and any capital gain will be subject to federal and state capital gains taxes. Additionally, if the taxpayer decides to cancel the exchange after the QI receives the proceeds from the sale of the relinquished property, certain restrictions apply to all Qualified Intermediaries that limit access to those proceeds until certain time periods have elapsed. Our exchange professionals are available to discuss those restrictions.
